Executive Summary

CH 1: Economic Security for Families

More people in New Mexico live in poverty than in almost any other state. Even middle class families can find themselves struggling to make ends meet. Economic policy efforts in New Mexico often focus on the needs of the business community, with the understandable logic that a stronger business sector creates jobs that will lift people from poverty. This report takes the additional step and asks readers to first focus on the foundation of our society, of our economy – the family.

To be effective long-term, solutions to eliminate high poverty rates must directly address the underlying causes of our poverty in our state. Possible solutions include:

  • Deploying research opportunities created from alternative ways to measure poverty
  • Reforms to make government funded child care higher quality, more constant for families, and thus better for the potential employers who rely on a stable workforce
  • Prorating benefit programs, smoothing out the benefits “cliffs” to eliminate disincentives to earning more income
  • Streamlining application and eligibility determinations so people can spend more time getting and keeping jobs than navigating deadlines and requirements for various government assistance programs
  • Using proven models for family support networks, through which community volunteers support one another in meeting challenges of daily life and increasing family incomes

CH 2: A Changing Workforce

High unemployment, low job creation, high poverty, shrinking population, and limited education all present barriers to building a strong workforce. New Mexico is battling all of them. As a result, the state has difficulty attracting new business, keeping its educated youth, and – some say – generally creating a climate conducive to economic vitality.

By 2020, most New Mexico students will not have the education, credentials or degrees required to fill 63 percent of New Mexico’s jobs.[1] This projection raises three critical questions. How do we help prepare New Mexicans for the following:

  • Jobs that will likely be available
  • High-paying careers that we want to come to the state
  • Careers and occupations that we have yet to imagine

Potential solutions to these questions include:

  • Adapting education and training programs to tap into the skills and interests of the millennial generation
  • Creating a statewide system of career guidance that transforms schools – as early as high school – into career-preparatory cultures, bridging high school to college and college to career advancement
  • Increasing the number of graduates with science, technology, engineering and mathematics (STEM) degrees and/or occupational certificates
  • Assisting full-time low-wage workers – including those with children, in financial distress or working multiple jobs – to more conveniently receive an education while they are employed

CH 3: Small Business Climate

Entrepreneurship plays a vital role in the growth of the economy. If successful, entrepreneurial innovations improve living standards, create jobs, generate wealth and stimulate related businesses.

While New Mexico ranks 36th in a national business climate study based on fiscal health, there is hope for our entrepreneurial arena. Despite the recession, New Mexico’s startup climate has been fertile compared to many other states, as shown by both statistical and anecdotal data. In fact, New Mexico ranks third in the nation on the percent of the adult population that became entrepreneurs.

A lot of activity takes place in New Mexico to grow and support small business. Strides include creation of new business incubators and accelerators, social or professional events for entrepreneurs and small businesses, mentorship opportunities, strategic public-private partnerships, targeted educational programs, and new or improved physical spaces.

Challenges remain however. Little sustaining benefit to the state will result either from creation of an entrepreneurial ecosystem or from converting ideas into companies, if those businesses leave the state to grow.[2] Reasons for leaving could include lack of access to capital, policies and taxes that are considered unfriendly, and merely the belief that New Mexico’s business climate is not conducive to growth.

In addition, entrepreneurs of all backgrounds tend to have difficulty finding capital to help grow or start a company. Access to capital is especially challenging for people who do not speak English as a first language, those with no credit, or people with insufficient collateral.

Potential solutions that could remove barriers and incentivize entrepreneurs include:

  • Increasing access to micro-lenders and lenders offering unique lending products to individuals with low credit and no collateral
  • Examining predatory lending and discriminatory lending practices
  • Considering modification of state and federal business lending guidelines to support more entrepreneurs
  • Increasing take-up of the earned income tax credit (EITC) among families operating enterprises

Whatever the solution, there is a growing body of thought that asks every New Mexican to think and act like an entrepreneur – looking for opportunities to grow our collective economy.

CH 4: Diversifying Our Economy

A diversified economy is one in which employment and revenue streams come from multiple industries. When jobs and revenues are concentrated in just a few types of businesses, a state’s economic stability becomes sensitive to volatile business cycles.

New Mexico ranks seventh worst in the nation for industry diversification while most of our neighboring states rank in the top 25.[3] The majority of New Mexico's jobs are concentrated in the healthcare, retail trade, accommodation, food services, education and public administration industries. Education and healthcare rank as our largest industry sectors, and are projected to experience the most employment growth.[4]

Given New Mexico’s reliance on declining federal spending and tax revenues from the fluctuating oil and gas industry, many people believe that the need to create a robust and diverse innovation-based private sector economy is crucial.

Possible strategies to diversify our economy include:

  • Following the example of other states that attract new people and new companies by marketing the state more aggressively, investing in strategic branding, staffing economic development agencies on levels on par with neighboring states
  • Recruiting retirees and freelancers to move to and work in New Mexico
  • Researching alternatives to New Mexico’s gross receipts tax system
  • Aggressively pursuing industries aligned with New Mexico’s existing resources including energy, high-tech industry, tourism, New Mexico’s spaceport, and our back office and technical support sectors

CH 5: Rural and Tribal Development

The issues facing rural and tribal communities in New Mexico are significant. Migration to urban areas remains a steady trend, with most living in urban areas. However, rural areas make up the vast majority of the state’s geography and without a long-term plan could become areas completely lacking in economic development and opportunity impacting all of New Mexico.

Major industrial economic base drivers in rural New Mexico include energy production, agriculture, retail and tourism (i.e., recreation, lodging, food services). Revenue generated through rural New Mexico’s resources – especially oil and gas – help pay for the state’s schools, universities, hospitals and other important public institutions. Agriculture, a longstanding foundation of rural and tribal economies, remains a significant industry. However, challenges include access to water, a wide array of financial barriers, and many farmers and ranchers nearing retirement age.

Potential strategies to grow rural and tribal economies include:

  • Investing in more renewable energy projects while maintaining current conventional energy generation
  • Eliminating barriers to an expanded energy transmission capacity so the state could sell more power to other markets throughout the Southwest
  • Expanding the use of value-added products that market or manufacture a crop to appeal to a niche market of consumers
  • Establishing programs and initiatives that support and incentivize locally New Mexico grown and purchased food products
  • Expanding and strengthening broadband capacity

Additional ideas for economic development for tribal areas specifically include:

  • Establishing a K-12 curriculum training for children and youth, community-based training for adults, and advanced investment and business management skills for tribal leaders
  • Providing increased opportunities for home ownership and quality housing
  • Providing access through local banks to capital and financial services and loans customized to meet the needs of rural and tribal areas
  • Collecting more data on trends particularly for Native-owned businesses, tribal economic growth, markets and general financial conditions

CH 6: Government and the New Mexico Economy

New Mexico’s reliance on federal government dollars is a double-edged sword. On one hand, New Mexico has grown and prospered from federal government investment in our state. Thousands of federally funded jobs and contracts contribute enormously to our state’s tax base through the national labs, military bases and healthcare services. On the other hand, over reliance on any single source is not healthy for an economy. For decades, lawmakers and community leaders have urged the state to reduce our reliance on federal funding. So the question remains: how can we diversify sensibly while leveraging existing federal dollars to spur more economic growth.

Possible strategies include:

  • Accelerating the creation of entrepreneurial private sector and nonprofit entity spin-offs from work done at our national labs and facilities
  • Expanding the mission of the national laboratories to develop new technologies in the areas of alternative energy sources, telecommunications, health, and desalination of water that would also meet the mission of other federal agencies
  • Creating and empowering a public-private coalition of experts to determine economic sectors that best contribute to New Mexico’s growth based on our resources and strengths
  • Aligning higher education funding and mission specialization with identified industries that would contribute to New Mexico’s economic growth

Another set of possible strategies are tied to the prominent role of federal healthcare dollars in our state. For example, expanding New Mexico’s healthcare workforce is an additional way to leverage existing government dollars, meet the state’s need for primary, dental and mental health providers and generate more livable-wage, professional jobs in New Mexico.

New Mexico also faces a growing need to build and maintain critical infrastructure – everything from roads, transportation and water systems, broadband infrastructure, energy transmission, courthouses, healthcare facilities and schools – but with limited and shrinking government funding to do the job.

Many people point to public-private partnerships (P3s) as a possible strategy for providing New Mexico additional financing opportunities for infrastructure development, creating efficiencies, and sparking innovation that can also lead to cost savings. Optimal P3s are agreements in which the skills and assets of each sector (public and private) are shared as are the risks and rewards in the delivery of the service or facility.

This short summary provides a snapshot of the challenges, opportunities and potential solutions offered in the full report that follows.


Chapter Endnotes

Short reference sources below; complete citations in the bibliography.
 

[1] (Southern Regional Education Board 2015)
[2] (New Mexico Department of Workforce Solutions Economic Research and Analysis Bureau 2015)
[3] (Utah Department of Workforce Services 2015)
[4] (New Mexico Department of Workforce Solutions Economic Research and Analysis Bureau 2015)

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